Supply-side pressure leaves bruise on oil prices

Questions about Trump-era economic trends and concerns about a glut of oil in the market pushed crude oil prices sharply lower in early Wednesday trading.

S&P Global Platts said in a daily newsletter emailed to UPI that analysts it surveyed expected to see a build in U.S. crude oil inventories of 2 million barrels per day for the week ending March 17. Data reported late Tuesday by the American Petroleum Institute revealed a build in inventories of more than 4.5 million barrels.

"At 528.156 million barrels, U.S. commercial crude oil stocks are 36.21 percent greater than the five-year average for the same reporting week and up 35.956 million barrels from the same time last year," Platts reported.

High inventories indicate supplies are building against demand in the United States, the world's No. 1 economy. Phil Flynn, a senior market analyst for the PRICE Futures Group, told UPI that API stocks and the question of efforts to replace the Affordable Care Act were putting negative pressure on the broader market.

"Worries over the passage of the American Health Care act shook global stock markets and raised concerns about Trump's wider agenda," he said.

The price for Brent crude oil was 1.4 percent below the previous close to $50.23 per barrel just before the start of trading in New York. West Texas Intermediate, the U.S. benchmark for the price of oil, was lower by 1.37 percent, declining to $47.58 per barrel.

House Speaker Paul Ryan warned that Republicans could lose control of Congress if they don't approve the replacement bill, called the American Health Care Act. Rep. Mark Meadows of North Carolina, said his main objection is that the GOP bill does not lower premiums for most Americans.

Markets will react quickly once official data from the U.S. Energy Information Administration is released late Wednesday morning. A draw on inventories last week brought with it signs of an effort by the Organization of Petroleum Exporting Countries to balance the market through managed declines was working, though Platts brushed off that sentiment by noting some of the decline was weather related.

OPEC and non-OPEC ministers meet during the weekend to consider the status of a six-month agreement to limit production. A research note published Wednesday by the Royal Bank of Canada said parties to the deal are expected to extend the agreement for another six months. That could offer mixed market support as improved oil prices over last year has acted as a stimulus for more U.S. shale oil production.